On Tuesday, Stanford University announced that it will no longer make direct investments in companies that mine for coal. Furthermore, it will be selling off its existing coal investments.
This decision follows five months of consideration by an advisory panel composed of Stanford’s students, faculty, staff and alumni. The panel cited the university’s Statement on Investment Responsibility, which allows trustees to reconsider investment decisions with “corporate policies or practices [that] create substantial social injury.”
As Stanford President John Hennessy explained to the LA Times:
“Stanford has a responsibility as a global citizen to promote sustainability for our planet, and we work intensively to do so through our research, our educational programs and our campus operations. Moving away from coal in the investment context is a small, but constructive, step while work continues, at Stanford and elsewhere, to develop broadly viable sustainable energy solutions for the future.”
The seed of this decision began with a student protest group. Fossil Free Stanford, part of a nationwide movement to ban fossil fuels, called on the university to divest from the 200 largest fossil fuel companies in the world. In the group’s official statement, they cite the threat to the environment posed by fossil fuel mining, and the change that can be enacted by financial protest: “It is unacceptable to profit from the destruction of our planet, and divestment, as a strategy, can have a powerful social and political impact.”
While Stanford has no current plans to drop its oil and natural gas investments, its willingness to drop coal makes it the first major university in America to commit to this strategy. Harvard President Drew Faust declined to consider a similar divestment, saying that the gesture would only be a meager loss for fossil fuel companies.
However, a University of Oxford study found that while the financial loss was indeed negligible, “The outcome of the stigmatization process, which the fossil fuel divestment campaign has now triggered, poses the most far-reaching threat to fossil fuel companies and the vast energy value chain.” This was evidenced by both Motorola and Revlon making significant changes to their businesses after stigmatization.
Stanford may have just started a new wave of socially conscious investment. How coal companies will react remains to be seen.